Pipeline operator Magellan Midstream Partners L.P. (MMP), announced its second quarter 2013 cash distribution of 53.25 cents per unit payable on Aug 14, 2013, to its unitholders of record on Aug 7.
This Tusla, Oklahoma-based partnership appears committed to share its increased benefits with unitholders. The latest hike reflects an increase of 13% from 47.125 cents paid in second quarter 2012 and 5% from 50.75 cents in the previous quarter. The annualized value of the new distribution is $2.13 per unit.
In fact, the partnership has a long history of increasing cash distributions. This is Magellan Midstream’s forty-fifth distribution hike following its initial public offering in 2001. Since then, its cash distribution has increased 306%.
A consistent growth record indicates a promising future for Magellan Midstream. Buoyed by this optimism, the partnership has increased its annual distribution growth goal to 16% for 2013 and 15% for 2014 from the previously targeted 10% for both years. However, the partnership’s growth prospects might be dampened by equity and debt markets on which it has to depend for growth finance as it is a Master Limited Partnership (MLP).
Magellan Midstream operates a diversified portfolio of energy infrastructure assets. This MLP primarily transports, stores and distributes refined petroleum products, and, to a lesser extent ammonia. Magellan Midstream conducts its operation in three segments: Refined products, Crude oil and Marine Storage.
The partnership is slated to report its second quarter 2013 earnings on Aug 1, 2013, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 53 cents per share on revenues of $452 million.
Magellan Midstream currently retain a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider Memorial Production Partners L.P. (MEMP), Rose Rock Midstream L.P. (RRMS) and Gulfmark Offshore Inc. (GLF) as good buying options. These stocks are expected to perform well in the short run and currently hold a Zacks #1 (Strong Buy).
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